Is professional gambling a trade?

Source: HM Revenue & Customs | | 29/05/2018

A thought-provoking question that has been asked by one of our readers is whether professional gambling is a trade or not. The answer to this question might surprise you. According to HMRC and reinforced by a number of court cases the answer is that gambling
is not a taxable trade. This answer holds even for a professional gambler who spends a significant amount of time building up their expertise and honing their skills.

This view is confirmed in HMRC's Business Income Manual where HMRC says that 'the
fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade'.

The only caveat to HMRC’s guidance is the possibility that some 'professional gamblers' do carry on a trade, for example, where they receive appearance money for appearing on television programmes. In fact, a professional gambler has nothing to report to
HMRC (unless he has other sources of income). However, we would still recommend keeping records of winnings (and losses) should you ever become the subject of an HMRC enquiry and be required to prove your source of income.

Planning note

This issue can also raise difficulties for a non-taxpayer. For example, it would be very difficult to obtain a mortgage or other type of loan from a mainstream financial lender. Gambling winnings in the UK are also tax-free regardless of whether it's your
main source of income or a simple hobby. Interestingly, the UK's view is not common across the world and many other jurisdictions tax gambling winnings.